A primer on types of homeowners’ associations
My first column, published in 2011, provided a general overview of the various types of homeowners’ associations in Illinois.
I continue to receive frequent inquiries from people who are not really sure what kind of homeowners’ association they live in. For that reason, I thought it would be helpful to update that column.
Frequently, when I inquire of a prospective client about the type of association they live in, I hear something like “I live in a townhome association.”
“A townhome is really an architectural style, and not a type of association,” I reply, and thus the journey to determine what we are dealing with begins. Let me provide here, then, a primer on the different types of homeowners’ associations in Illinois and the documents and laws that control them.
One quick sidebar about the laws governing homeowners’ associations. Unlike most other states that have a uniform set of laws that regulate all types of homeowners’ associations, Illinois has various statutes that regulate the different types of homeowners’ associations. The substance of these statutes is frequently different from one another, for no apparent reason; while some provisions are identical. Further, when a provision in one of these statutes is amended, the identical language in another statute is not. That is just plain sloppy work of the legislature. This patchwork quilt of laws needs constant mending, and it has not been done very well.
All homeowners’ associations share certain traits. Each is a hybrid between a real estate entity and a business entity, and each is governed by a board of directors. Nonetheless, each type of homeowners’ association is legally distinct and typically governed by a statute directed at the particular type of association. Each of these associations is governed by a declaration of condominium or declaration of covenants and bylaws.
A condominium association is the most well-known type of homeowners’ association. A condominium refers to any property that includes language in the declaration that expressly submits the property to the provisions of the Condominium Property Act. A condominium is typically a residential or commercial property, and the picture that often comes to mind is that of a square-shaped living space in a mid-rise or high-rise building. However, a single family home, a multilevel townhome-style property, a parking space, a boat dock, and a campsite are all examples of properties that can be a condominium unit. A condominium is governed by the Illinois Condominium Property Act and the Illinois Not for Profit Corporation Act (whether or not the condominium association is incorporated).
A master association is an association to which the powers of one or more condominium associations have been delegated. The delegation is usually described in the declaration of condominium for the underlying condominium associations. A master association typically has its own declaration of covenants and bylaws as well. A classic example of a master association is where there are multiple underlying condominium associations, each of which delegates exterior maintenance of the condominium building and property to a master association. Master associations are governed by their declaration of covenants and bylaws and Section 18.5 of the Illinois Condominium Property Act. Master associations are also governed by the Illinois Not for Profit Corporation Act, if the master association is incorporated. Why is a master association governed by a single section of the Condominium Property Act? Because the legislature, unable to create a stand alone statute for master associations, decided to create a statute within a statute and “dumped” whatever it could muster into Section 18.5 of the Condominium Property Act.
The latest entry into the homeowners’ association arena is the common interest community association. Common interest community associations are governed by the Common Interest Community Association Act. A common interest community association is also governed by the Illinois Not for Profit Corporation Act, if the common interest community association is incorporated. A common interest community association is essentially an association other than a condominium or cooperative. However, a common interest community association with 10 units or less or annual budgeted assessments of $100,000 or less are exempt from the Common Interest Community Association Act. That said, the board of directors of a small common interest community can elect to be governed by the Common Interest Community Association Act. Common interest communities may include attached or detached townhomes, villas or single family homes.
There is a lot of good information in an association’s governing documents and laws, so they are a good place to start if you want to become familiar with your association’s legal structure. Copies of these statutes I have discussed are available at www.ksnlaw.com.
• David M. Bendoff is an attorney with Kovitz Shifrin Nesbit in the Chicago suburbs. Send questions for the column to him at CondoTalk@ksnlaw.com. The firm provides legal service to condominium, townhouse, homeowner associations and housing cooperatives. This column is not a substitute for consultation with legal counsel.